Tie Up Legal Loose Ends Before the End of the Year
As the year comes to an end, it is a good idea for your business to conduct a legal audit to prevent unnecessary risk and expenses in the coming year. A few minutes now can save you substantial cost and trouble later. Here are a few things your business should consider doing before the new year:
Dissolve any inactive businesses
There’s no need to continue to pay filing fees to maintain business licenses and permits for a business entity you are no longer using. To dissolve your business, you’ll need to file Articles of Dissolution with the Secretary of State to notify the state of your intention to dissolve the company. There’s no filing fee in Washington (unless you want expedited service) to file the form. In order to avoid any additional filing fees that may result in keeping your inactive business “open” in 2014, it’s important to take care of dissolving the company before the year end.
Develop a plan to incorporate your new business and limit your liability in 2014
In most cases it makes more sense to incorporate a new business early in the new year, but it is important to develop a plan to be ready to go as soon as possible after the new year fireworks end. Whether it is choosing the type of limited liability entity is best for your business or choosing the right state to incorporate in, it is always advisable to “do your research,” so to speak. You want to be ready to go early in the year, and the new processes necessary for your new business (including your new accounting responsibilities) should start as early as possible.
Are you running a Corporation? Don’t forget to file your annual report and hold your annual meeting
When you operate a business as a corporation, there are certain formalities that you are required to take care of on an annual basis, including filing an annual report with the Secretary of State. These are typically due around the same time every year, and this is usually around the date that you originally incorporated your business. You should receive annual notices that provide instructions on filing your annual report online, and there’s a filing fee that you’re required to pay to maintain your “good standing” with the state.
You are also required to hold an annual shareholder meeting. The annual shareholder meeting is required to elect the corporation’s directors and officers, and for the shareholders to vote on any other outstanding issues. Most states allow shareholders to consent to elect directors in lieu of holding an actual meeting. The end of the year is a good time to reflect on your business practices and make sure you are doing what you need to do to help maintain your limited liability.
Have there been changes to your Corporation? File your “Articles of Amendment”
If your company has undergone some changes in ownership or location the past year, you may need to file Articles of Amendment with the Secretary of State to notify the state of these changes. Do you no longer stay in contact with your original registered agent? You can change your registered agent by submitting a form online (for free). Are you planning to use a new name in the new year, or have you started using a new name (e.g. for a new line of business or as a rebranding tactic)? If so, you will want to file a master business license application to register your trade name with the department of revenue in order to help your company and its owners maintain its liability shield.
Update Vendor and Employee Contact Information
At the end of each year, it’s important to make sure you have current contact information for your vendors and employees, because you will be sending tax forms (1099s and W-2s) early in the following year. Establishing a simple procedure—e.g. a friendly email reminder to submit any updated addresses—for gathering updated information each year will no doubt reduce the hassle and time spent on this task.
Tie up your legal loose ends
Since we all know that the new year brings a new set of tasks to complete when running your business, it’s important to take inventory now of the issues you’ve set aside this year.
Have you obtained all the necessary licenses and permits? Have you properly protected your trademarks by filing for federal registration? Have you collected money owed to your business? Perhaps you’ve been wanting to put together a written employment agreement to begin using in your business? It’s important to take inventory and organize your business, and it feels good to start off the new year with everything in order. That way, you can focus on making the new year the best yet for your business.
If you’re interested in help conducting a year-end audit or have questions about any of your year-end business responsibilities, please comment below or contact us today. Have a great holiday season!